One of the biggest financial blunders in Islanders history might be close to returning.

Alexei Yashin is working out at the team’s training facility in Syosset, L.I., and is in negotiations with the team on a possible new contract, Yashin’s agent Mark Gandler confirmed to The Post yesterday.

Gandler said there has been no advancement in negotiations over the weekend since the story was first reported in Newsday on Friday. Although he would not discuss the details of the proposed arrangement, Gandler said he’s having on-going conversations with Islanders general manager Garth Snow about bringing the 37-year-old Yashin back.

Snow was not immediately available for comment.

Former Islanders’ general manager Mike Milbury originally obtained Yashin from the Senators on draft day 2001, by trading Zdeno Chara, Bill Muckalt and the second overall pick in that year’s draft (turned into Jason Spezza) for the two-time 40-goal scorer. Milbury then signed Yashin to a 10-year, $87.5 million contract, which was reduced 24 percent by the new collective bargaining agreement in 2005 and eventually bought out in 2007 by Snow.

In accordance with the terms of Yashin’s buyout, the Islanders have been taking an annual salary cap hit of $2.204 million, which will continue through the 2014-15 season whether he plays for the team or not.

Since the buyout, Yashin has been out of the NHL and has played four seasons in his native Russia with Lokomotiv Yaroslavl and SKA St. Petersburg in the KHL, amassing 70 goals and 117 assists in 220 games. Last season for St. Petersburg, he scored 15 goals in 52 games.